The Israeli Petroleum Law was enacted in 1952. The Law governs the exploration and production of petroleum onshore and offshore Israel, including its continental shelf. "Petroleum" is defined in the law as "any petroleum fluid, whether liquid or gaseous, and includes oil, natural gas, natural gasoline, condensates and related fluid hydrocarbons, and also asphalt and other solid petroleum hydrocarbons when dissolved in and producible with fluid petroleum".

Petroleum resources are the property of the State, whether or not located on state lands. No person is allowed to explore for or produce petroleum without receiving a petroleum right under the Law. The Law provides for three types of rights. The basic level right is the preliminary permit, which may be granted with or without a preemptive right and is limited for a period of up to 18 months. The preliminary permit allows the permit holder to conduct preliminary investigations, such as seismic surveys and other geophysical surveys.

The second type of right is the license, granting an exclusive right for further exploration work, and requiring the drilling of an exploration well. The initial license term is 3 years, extendible to a maximum period of 7 years (and additional 2 years upon discovery of petroleum and for a specific purpose). A license area may not exceed 400 km2.

Upon commercial discovery of petroleum, which is to be approved by the Petroleum Commissioner as such according the Petroleum Commissioner Guidelines for the Approval of a Discovery, the licensee may apply for the third type of right, which is a production lease, the area of which may not exceed 250 km2. The initial lease term is 30 years, extendible to a maximum period of 50 years. A lease confers upon its owner the exclusive right to explore for and produce petroleum in the lease area and requires the production of petroleum in commercial quantities. A lessee is entitled to transport and market the petroleum produced, however, the Minister may requires to supply domestic needs first, at market price. A lessee is liable for paying the market value at the wellhead of royalties of 12.5 % of the quantity of petroleum produced from the lease area, excluding the quantity used in operating the lease area.

The holder of a petroleum right is required, in accordance with the Guidelines for Providing Securities Associated with Petroleum Rights, to submit guarantees, as well as yearly fees, and petroleum profits levy.

The Law provides for an administrative structure, headed by the Petroleum Commissioner who acts partly in consultation with the Petroleum Council. The enforcement of the Petroleum Law is under the responsibility of the Minister of Energy.

The award of petroleum rights, with the exception of the preliminary permit and preemptive right is published in the Petroleum Registry and in the official governmental gazette (Reshumot).

Disclaimer: The English version of all legislation is a non-binding, unofficial translation from the original, binding, Hebrew version and is published for the convenience of the Public. Only the Hebrew version, as officially published in the official gazette (Reshumot) shall be binding.